Goldman Names Managing Directors in Biennial Promotions

Lloyd Blankfein, chief executive officer of Goldman Sachs Group Inc., right, said the average tenure for employees with a title of vice president or higher is 9.1 years, up from 7.6 years in 2001. Photographer: Andrew Harrer/Bloomberg

Nov. 13 (Bloomberg) -- Goldman Sachs Group Inc., the fifth-biggest U.S. bank by assets, promoted 280 employees to managing
director, up from 266 last year, as it begins making the
selections every two years instead of annually.

The promotions disclosed today on the company’s website
take effect Jan. 1 and won’t happen again until 2015, after the
bank decided earlier this year to change to a biennial process.
New York-based Goldman Sachs last year named 70 people to its
partnership, the fewest since the firm became a public company
in 1999, and won’t promote new partners until next year.

Chief Executive Officer Lloyd C. Blankfein said yesterday
that the firm is always focused on recruiting and retaining top
talent, even as it sets aside a lower portion of revenue for
compensation. Blankfein, 59, said the average tenure for
employees with a title of vice president or higher is 9.1 years,
up from 7.6 years in 2001. Managing director is the second-highest title among non-executives.

“The insight and perspective that is gained by living
through several cycles is impossible to quantify, and having a
group of professionals who have experienced those cycles
together also carries an immeasurable benefit,” Blankfein said
yesterday at an investor conference in New York.

‘The Federation’

The securities division has the most new managing directors
with 94, while 51 are in investment banking, 39 in investment
management, 14 in research and eight in merchant banking, said
David Wells, a bank spokesman. The other 74 work for the firm’s
administrative arm, known as “The Federation.”

About 56 percent of those just promoted are based in the
Americas, 27 percent in Europe, Middle East and Africa, 15
percent in Asia-Pacific and 2 percent in India, Wells said. Last
year, about 58 percent were in the Americas, 26 percent in EMEA
and 17 percent in Asia.

Women comprise 20 percent of the incoming class of managing
directors, compared with 23 percent in 2012 and 19 percent in
2011.

Average compensation cost per employee at Goldman Sachs
fell 5 percent to $319,755 in the first nine months of 2013,
even as revenue climbed 2 percent. The company employed 32,600
people at the end of September, 3,100 fewer than at the end of
2010.

‘Rigorous Exercise’

Managing directors typically receive a base salary of
$500,000, lower than the $900,000 granted to partners. Both also
get bonuses that can boost total compensation into the millions
of dollars.

About 7 percent of Goldman Sachs’s employees hold the
managing director title. The firm created a non-partner managing
director title in 1996 to recognize top workers who weren’t yet
partners, and decided in March to switch from the annual
tradition.

“A biennial process will allow us to invest more in the
managing-director selection process so that it will continue to
be a disciplined and rigorous exercise,” the bank said in a
March memo to employees. “This will help to ensure that the
managing director title remains as aspirational as it should be
for our top performers.”

The firm’s first class of 87 managing directors included
William C. Dudley, now president of the Federal Reserve Bank of
New York; Clifford S. Asness, who left in 1998 to start hedge
fund AQR Capital Management LLC; and Richard J. Gnodde, who was
named co-head of global investment banking at Goldman Sachs in
May 2011.